I really need advice about buying a house...

In My Humble Opinion
1

Okay, so here’s the situation: it looks like I’m going to be staying in Nashville for 2 and 1/2 more years. Then, however, I am out of here. If nothing else, there is no PhD program in this area for social work, which I really want to do after the master’s at UT.

I’m really getting sick and tired of where I’m living, though. It’s SO small, and I’m doing so much work around the house (which the landlady won’t do) that I really might as well be the owner. I truly hadn’t thought of buying a house as I will NOT be here all that much longer. However, my brother’s longtime gf wants to sell her house. It was appraised at only $70,000-- the neighborhood hasn’t yet been gentrified (oh, but it will be, it’s just a question of time,) it’s small, it doesn’t have central AC. I seriously wonder if I should buy it. But I am absolutely moving within three years AT THE MOST.

So… ADVICE, ADVICE, PLEASE!!!

Does it make sense to buy a house in that circumstance? What about using it as rental property after I move? (I do know people who have rented houses from out of state.) Would it make more sense to make a big down payment, or not? All advice appreciated!

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As a rule, advice threads belong in IMHO. I’ve moved it there.

samclem GQ moderator

3

Sell my house . . . Rent my house. . . Oh, my, the decisions (actual title of linked thread may vary).

The above link is to an current thread in MPSIMS, wherein OpalCat asks advice about selling or renting her home, which she already owns–well, owns in conjuction with a bank. OpalCat is very much in the position that you will be in when the time comes for you to move, although your details will vary, maybe by quite a lot. If anyone thinks that being a rental property owner, especially long distance is a good idea, I’ve missed that post. Certainly there are some horror stories about rental property included in that thread.

Don’t take this as criticism of your choice to start this thread, just as a helpful tip to a thread which might help you figure out what you need to consider before you make your decision.

4

[QUOTE=Anise]
I’m really getting sick and tired of where I’m living, though. It’s SO small, and I’m doing so much work around the house (which the landlady won’t do) …
[/QUOTE]

Perhaps a different rental should be among the alternatives you consider.

5

Never buy off a friend.

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[QUOTE=Quartz]
Never buy off a friend.
[/QUOTE]

Not necessarily true; warning, anecdote follows. Many years ago I worked for a company where folks moved around quite a bit. I and another colleague were moving from homes we liked and had cared for well. Two other colleagues were looking for houses and had been to both of our homes many times. Long story short, two home sales between four friends. In retrospect, we maybe should have been more carefull but all turned out well. We (all four of us) used the same lawyer, on the same day for the closings. Lawyer: “Okay, now I’m working for A” , now “I’m working for B”… Then out to dinner to celebrate.

As an older more cynical person, the above would proably scare me. But if the gf’s house is what you want, go for it. But get it inspected and appraised by your guy first.

PS don’t buy a condo (just MHO)

7

I’d be concerned that two and a half years isn’t long enough to provide an adequate return on investment. You need to consider the total cost of ownership (mortgage, insurance, property taxes, upkeep/maintenance, etc.) vs. renting. Obviously, there are some tax advantages to property ownership (deduction of taxes and mortgage interest), but the benefit of those will depend on your overall financial picture. Here are a couple “rent or buy” calculators that will give you a quick and dirty idea of the benefits of buying.

But if the money isn’t the issue, then I’d advise you to look around. While I’m horrified to think you could actually buy a home for $70,000 (“horrified” in the “why do I live here, then??” sense of the word), you also need to see what that could get you elsewhere in the city. Maybe there’s another property around the same price that includes features you’d want that this property doesn’t have.

I have been told that, at least when it comes to house hunting, I am incredibly picky. (I am assured, however, that otherwise, I’m perfectly laid-back. :slight_smile: ) And I’ve always viewed house hunting as a little bit like falling in love: you can make your list of all the qualities you want in a house, but someday you’ll find the house that makes your heart go pitter pat. If the GF’s house doesn’t do that for you, shop around. Don’t just buy it because it’s convenient.

8

[QUOTE=Anise]
Okay, so here’s the situation: it looks like I’m going to be staying in Nashville for 2 and 1/2 more years. Then, however, I am out of here. If nothing else, there is no PhD program in this area for social work, which I really want to do after the master’s at UT.

I’m really getting sick and tired of where I’m living, though. It’s SO small, and I’m doing so much work around the house (which the landlady won’t do) that I really might as well be the owner. I truly hadn’t thought of buying a house as I will NOT be here all that much longer. However, my brother’s longtime gf wants to sell her house. It was appraised at only $70,000-- the neighborhood hasn’t yet been gentrified (oh, but it will be, it’s just a question of time,) it’s small, it doesn’t have central AC. I seriously wonder if I should buy it. But I am absolutely moving within three years AT THE MOST.

So… ADVICE, ADVICE, PLEASE!!!

Does it make sense to buy a house in that circumstance? What about using it as rental property after I move? (I do know people who have rented houses from out of state.) Would it make more sense to make a big down payment, or not? All advice appreciated!
[/QUOTE]

Normally, buying a house when you plan on leaving the area in 2.5 to 3 years would be a bad idea, but you’ve said several things that intrigue me. First you seem to imply that the house is a good buy at $70K and you also say that the neighborhood may be on the cusp of “gentrification”. There may be an opportunity here, you’ll have to do some homework and be honest w/ yourself about the results.
If you put less than 20% down you’ll probably have to pay for private mortgage insurance, and that’s money wasted. If you put the 20% down, and finance the balance on a 30 year fixed, your monthly cost, including taxes and insurance, should be around $500.00 a month. Assuming what you’ve said, about the house being a bargain and the area about to be drastically improved, and if you could invest some sweat equity into the place in the 2-3 years your planning on living there, this could very well be a good investment. You would have to be able to rent the place for a minimum of 7-8 hundred a month and you’d need to visit at least a couple of times a year, but this could be a very good investment.
Again, be pessimistic about you evaluation of the circumstances, look for the worst case scenario. Good luck.

9

Thanks, y’all, and I’ll check out that thread. :slight_smile: Another thing I’ve thought about is renting the house from her, although that would be more problematic from her POV. $70,000 is not going to buy anything better around Nashville (that isn’t over a toxic waste dump, anyway.) Nashville’s a weird, weird place when it comes to home prices. I’ve never seen anywhere with such a range. It’s perfectly possible to spend just as much on a house as you would anywhere else in America, and yes, I do mean ANYWHERE else, including San Francisco, L.A., San Jose, etc. But then you have these little on-the-cusp-of-gentrification neighborhoods where you can find houses like this one. The thing is, though, that I don’t know if it’s going to happen in as little as 2-3 years.

10

For me, I think the key factor is how urgently you’ll need to sell the house when you leave to get your PhD. A $70,000 house that’s not a total sty does seem to have a fair amount of appreciation potential, which is pretty rare after such a big housing boom. (Although the fact that it is still so cheap would make me seriously question what it is about the house or neighborhood that missed the boom so completely.) But the market as a whole could easily go really, really soft in the next few years and a house which missed the boom on the upswing could become impossible to unload during a downturn. If you have resources to draw on (savings, family, prostitution, etc.) to allow you to hold for an extra year or two if necessary, I think you’re far more likely to come out ahead (or at least less behind).

As for renting it out, I’d be a little nervous, personally. Getting good tenants is hard, and bad ones will ruin a rental. Trying to be a landlord from afar at the same time you’re trying to get a PhD could be a tall order.

11

I talked to some friends, and honestly, I don’t think I have any business buying a house right now. I do think I"ll talk to her about renting it, though. I could do it very cheaply, and since tenants have zero rights in this state ANYWAY, I might just as WELL rent from someone I know!

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[QUOTE=Giraffe]

As for renting it out, I’d be a little nervous, personally. Getting good tenants is hard, and bad ones will ruin a rental. Trying to be a landlord from afar at the same time you’re trying to get a PhD could be a tall order.
[/QUOTE]

This is a response to this and Eureka’s post above.

When I left MD I had just had some work done on the house that I knew I wouldn’t recoop if I sold (windows, doors, roof), so I hired a Real Estate office that specializes in rentals to rent it for me. For about 10% of the rent, they take care of finding tenants (the % is higher the first month of the lease if they have to find new tenants), doing background checks, managing the property/repairs, etc. Once a month I go to the mailbox and get a check from them. No hassles. Twice in 10 years the house needed some rennovations/major repairs (carpets, paint, stuff like that). They made sure I was OK with the costs/wanted the work done - even got me really good deals because they had people they contract with often to do the work.

In short - long distance rental is not a problem if you hire a company to do it for you. Even if I still lived in the area, I would go through a management company since they make it so painless and are better at getting good tenants.

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[QUOTE=Anise]
I talked to some friends, and honestly, I don’t think I have any business buying a house right now. I do think I"ll talk to her about renting it, though. I could do it very cheaply, and since tenants have zero rights in this state ANYWAY, I might just as WELL rent from someone I know!
[/QUOTE]

I think that’s a wise decision. If you’d be staying, then that’s a whole other discussion. But I fear we’re at the cusp of a really nasty correction in the housing market. You certainly don’t want to be trying to unload a house in a buyer’s market. Instead, I’d sock as much money away for a downpayment on a house in my new location.